Introduction

 

Economics

1. Economics is the study of how limited resources are allocated.

2. There are two main branches of economics:

   1. Microeconomics studies how individuals (firms or households) make choices and are influenced by economic forces.

   2. Macroeconomics looks at the economy as a whole, focusing on issues such as growth, unemployment, inflation, and business cycles.

 

Economics Reasoning

1. Given limited resources (scarcity), there are opportunity costs for every choice.

2. The opportunity cost of an action is the benefit missed by not choosing the next-best alternative. An action should be chosen only if the expected benefit is greater than the opportunity cost.

3. Individuals attempt to maximize their utility by allocating and spending their resources according to their preferences.

4. Individual consumption and production options are expanded through the market, where goods and services are exchanged for mutual benefit.